Setting up a business in Germany

Germany offers a huge variety of investment possibilities for overseas companies. Geographically, the country shares borders with every major economy in Central Europe - providing access to both established markets in Western Europe and emerging markets in Central and Eastern Europe.

Starting Small

Lots of large, successful operations in Germany have evolved from overseas companies entering the German market on an initially small scale. Many begin by only employing one person locally, which is a relatively straightforward process.

As soon as businesses start to grow significantly and increase the number of local hires, they will need to start thinking about creating a permanent establishment or incorporating a local legal entity. It is also at this stage that more substantial tax registrations and legal considerations need to be made.

Which Entity?

Germany offers a variety of legal entities. The main incorporation vehicles are:

Gesellschaft mit beschränkter Haftung (GmbH);

Unternehmergesellschaft (UG); and

Aktiengesellschaft (AktG).

The above legal entities are all similar to a North American LLC or a European Limited Company. The UG has only recently been introduced.

What Next?

Choosing the right entity requires careful consideration and will depend on the activities your business is carrying out in Germany. Getting the right advice as early as possible will help ensure your German entity has the best possible chance of success.